Market Conditions in 97229>Question Details

Vincent, Both Buyer and Seller in

I just had my house build in an established area in NW Portland (Forest Heights) where the houses in the area

Asked by Vincent, Tue Feb 12, 2008

are between 10 - 12 years old. How can I determine the exact value of my house since the houses in the neighborhood aren't comparable to mine? Thank you.

Vincent

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6
I would call an appraiser Wayne Richards 503-641-2618 who does high end homes. You need to be priced aggressively and you need to compete with the short sales of the new homes. You can sell but if you are thinking about last years prices it is not worth talking to anyone. I am not sure how new your house is but there are many short sales up there presently. Just price it right to sell not what you want to make if you need to get out. I just did some comps for 5,000 sq ft $900,000-$1,300,000. 2 homes were on the market before they sold for 1 1/2 years and the sellers came off the price about 20% on each and another well priced home sold in 2 days. You are in a beauty contest with a price war with your house, so you need to be priced right to get the buyers attention from the day it is listed because there are buyers out there looking and you only have one chance to make a first impression. The longer the house is on the market the lower price it will sell for. Interest rates are the big question mark if they go up it will just reduce the potential number of buyers that can afford your house so sell now while rates are almost the best they have been in 50 years. Good Luck

Tom Inglesby, Broker
ABR,CRS,CLHMS
RE/MAX Equity Group
Portland, OR 97239
1 vote Thank Flag Link Tue Jun 17, 2008
Hi Vincent, My name is Chris Courtney and I am located in Eugene, 15 years as a State Certified Residential appraiser and principal broker to http://www.HouseNow.com where you can search for properties that are listed in your neighborhood and which would compete with your property .

This is called the principle of substitution as buyers seek specific locations, then price...such that your brand new home priced at $X would be investigated by a buyer, as well as the 50 year old house 2 blocks away price at $Y.

I am foremost a State Certified Residential Appraiser of 15 years. I have appraised numerous property types including a significant amount of new(er) construction. There are two approaches to value an appraiser relies upon for single family, owner occupied housing: Market Comparable Approach and Cost Approach.

Given your home is new(er) construction, and likely subject to very little depreciation, the cost approach is a solid approach to valuation. This approach reconciles your costs of construction that would consider the following: 1) site as though vacant based on area lot sales (what would your lot sell for if vacant); 2) costs of above grade living area excluding garage area; 3) costs of below grade living area (basements, either finished or unfinished); 4) costs of appliances, decking, fireplace, and other amenities; 5) garage area. This subtotal is then depreciated which, in your case, is likely zero. If you back up to a rail line, are situated under heavy tension power lines, of your rear yard is location to an Interstate Billboard (traffic) then an appraiser would deduct a % for what we term external obsolescence...which is entirely subjective...and attempts to represent a buyer resistence for such obsolescence...which equates into a deduction in pricing.

Once depreciation is calculated (physical, external, functional (such as a 10 bedroom, 1 bathroom house which obviously could use more bathrooms), that number represents a reproduction or replacment costs new PRIOR to vacant site value AND site development being added. Site development consider concrete flatwork, fencing, landscape, sprinklers, 10 foot waterfall feature...whatever....the total of all these categories is your replacement costs new. Don't forget to add your financing costs as well...such as loan fees and interim construction interest. If you were the general for your home, such that you paid a contractor an overhead fee, you should consider including a 10-15% entrepreneurial profit on hard costs to reward your risk for building...general contractors do it all the time and how they make a living. Your profit of 10-15% should be calculated on hard costs only (costs of living area, below grade area, appliances, decking, garage, site development, etc...) and should not include soft costs (site, lending fees). NOW, read further.

Your immediate neighborhood will have comparable market sales & active offerings. I realize they are older homes, and likely not comparable in age...as well cost less to build years ago when energy costs were not so high as they are today (copper, metal, framing, etc...).

However, an appraiser & lender reading the appraisal will look at market comparables (sold, pending, active) to estimate a market value for your property with adjustments for: site size, view amenity (you have a view, they don't which should be adjusted in site value category as the view site is worth more), quality $/sf (they have vinyl, you have tile which costs more $/sf), effective age (their house is physically 10 years old but effectively is 5 years old as houses do not straight-line depreciate, compared to your house being new and having an effective age of 0-1), bathrooms, living area $/sf, and other categories such as garage area, fireplace amenity, landscape, decking, patio, etc.

In the end, ideally, the market approach indication and cost approach indication (after depreciation) should be relatively close in comparison.

The best, first step is to consider your costs of acquisition: what are the costs you experienced in building your home. And don't forget about that profit either....aka...if you sold the house...you ideally would sell it for more than it costs to build. If a general built the house for speculation, they would charge a profit % on hard costs.

However, I do want to define what it means to be superadequate or overbuilt...if you gold plated your fixtures, added a platinum roof, built a 6,000sf house in an older neighborhood where typical sizes are 2,000sf...you may suffer market resistence...I doubt this is the case for you, but some builders (especially on infill lots) will build what they think will be an amazing home...and is...but a buyer wants to be surrounded by like homes. A majority of buyers do not want to be the big dog on the street....they want to fit into their surrounding community. This affects resale down the road and is what we term incurable obsolescence. Regards!
Web Reference: http://www.HouseNow.com
1 vote Thank Flag Link Wed Feb 13, 2008
Not to be obtuse, but it depends on the purpose of the valuation. If you want a general idea, ask your insurance agent, especially if your policy allows for replacement value (it's also free). If the purpose is for estate reasons or for refinancing, an appraiser is the best choice. An appraiser can also use replacement value formulas and other factors they use in their practice,as the appraiser below elaborated. That will probably set you back $400, though. If your purpose is for resale, hmm, that's a toughie, because the market will determine the value.

Forest Heights is a desirable area, but sales of high end homes on your part of the West Side have really slowed down, lately. But truly unique houses always seem to draw buyers. Think of it this way: If a buyer saw ten homes in the perfect neighborhood for $800k, which house would he/she buy and why would he/she choose that one? It won't be because it was the cheapest house, it will be because it was the most special to that buyer.
0 votes Thank Flag Link Fri Jul 4, 2008
Vincent,

Great question. A certified real estate appraiser is the only way to determine your value. I recommend calling Beth Cannady of PDX Home Appraisals.

Her Phone number is 503-888-6710 (Office) or email at beth@pdxappraisals.com.

Best of Luck,

Brian Ramsay
Principal Broker
Realty Trust Group Inc.

http://www.OregonStyle.com
0 votes Thank Flag Link Fri May 30, 2008
An appraiser would go out of your neighborhood and look at homes that are of a similar age and make an adjustment to what is typical for your neighborhood. Your house will no doubt be worth more that your neighbors assuming your lot is similar, but not worth as much as a comparable new home which is surrounded by other new homes. Often times the lots in the 'older' part of a development are far more attractive than a 'new' part.
0 votes Thank Flag Link Tue Feb 12, 2008
The first question i would ask is, "Why do you want to know the exact value of your house?" Are you considering selling it? Do you need a figure for insurance purposes? Curiousity?

Ultimately, the exact value of your house is a figure that a willing buyer and willing seller agree to. A competent Realtor and/or appraiser can provide you with a pretty specific price range - even in an established neighborhood (1-2 mile radius) by making adjustments to the subject property. (your house)

If you need more specific information, just drop me a line.

Best of luck!
0 votes Thank Flag Link Tue Feb 12, 2008
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